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Nortel's $300M EDGE

Nortel Networks Corp. (NYSE/Toronto: NT) today announced a new four-year, $300 million contract to take T-Mobile USA closer to the EDGE of 3G.

The deal builds on Nortel's original 2001 deal with T-Mobile USA (or Voicestream, as the company was formerly known) to implement a GSM (global system for mobile communications) overlay on its TDMA network in the operator's markets in the U.S. Under the terms of the new contract, Nortel will roll out additional base stations, as well as core networking products, in cities including Chicago, Dallas, Denver, Detroit, Milwaukee, New York, and Salt Lake City.

T-Mobile says that these upgrades will enable it to increase its capacity and capabilities to provide data services like text messaging, picture messaging, Web browsing and gaming.

So what is Nortel delivering to T-Mobile? For starters, more GSM capacity on the network. Second, a card swap at the base station level that enables a GPRS (general packet radio service) upgrade to the GSM network, which makes it possible for data to be passed over the network at average speeds of 20 kbit/s to 50 kbit/s. Also, another card swap and a software upgrade to the core network brings up the EDGE (enhanced data for GSM environment), which is expected to bring data rates up to 100 kbit/s or more (see Vendors Sharpen EDGE). Nortel says its equipment will accept these upgrades (and like them, dammit!).

This $300 million deal is one of the largest contracts Nortel has won recently. The company's wireless business earned $4.2 billion in 2002, but many of the contracts it -- and its rivals -- have been winning are in the $20 million to $50 million range.

For its part, T-Mobile remains tight-lipped on when it will actually start to offer EDGE services. "We have been upgrading our networks to EDGE but have not yet given any launch dates," says company spokewoman, Kim Thompson (not, sadly, Catherine Zeta-Hot). "I'm not even sure if there are devices or applications that are available now that can take advantage of that bandwidth."

Initial EDGE services are expected to be launched by U.S operators later this year (see AT&T Scales Back 3G).

— Dan Jones, Senior Editor, Unstrung

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